Cup Village loss doubles to $56m

BY BERNARD ORSMAN

The America's Cup Village, run by some of New Zealand's top businessmen, lost more than twice the amount previously disclosed.

Papers released under the Official Information Act show that instead of the $23.5 million loss declared last week by America's Cup Village Ltd, the real loss could be nearer $57 million.

The money was spent on building the yachting facilities and managing the village.

The ACVL board included Peter Kiely, a top city lawyer, Lindsay Fergusson, formerly with Mobil, NZ Steel and Magnum Corporation, multi-millionaire car salesman Colin Giltrap and Peter Hagen, the executive chairman of Deloitte Touche Tohmatsu.

The papers reveal that former Brierley executive Rob Sutherland was paid $760,000 in one year, including a golden handshake, for managing the public's $85.7 million investment in the America's Cup Village. That investment today is worth $29 million - a $56.7 million difference.

His salary of between $440,000 and $450,000 included the use of a sponsor's car (worth $25,377) and a significant bonus for completing the $72 million construction phase of the project.

A short time later, Mr Sutherland was sacked, then given a $320,000 golden handshake.

In another revelation, companies linked to two directors on the ACVL board were given contracts worth more than $500,000.

Mr Hagen said Deloitte had a sponsorship agreement with ACVL to provide free accountancy and consultancy services, worth $153,000 over two years. In return the company was given paid work worth $460,000.

He said this was a "normal" process for professional services firms. He had declared his interest to the board and he had nothing to do with the financial side of the work between Deloitte and ACVL.

Former ACVL chairman Lindsay Fergusson said from Britain last night that he was a director of Terabyte Interactive which, as official supplier of internet consulting services to the village, received $64,965 in goods and services from ACVL.

Mr Fergusson said he declared his directorships of Terabyte in the ACVL interests' register and was never personally involved in any of the commercial arrangements between the companies.

Furthermore, he said he was not a shareholder in Terabyte and could not benefit personally.

The Herald has been fighting ACVL and its public shareholder, Infrastructure Auckland, over several months for simple answers to where the ratepayers' $75.7 million and taxpayers' $10 million was spent.

The newspaper has also sought some acknowledgement that although the America's Cup was a huge success, the project lost money.

Amongst previously unknown spending was:

* $2 million on public relations

* $8.6 million on administration.

* $72 million to build the yachting syndicate and marina facilities.

* Income from superyachts falling about $2 million short of projections.

A written denial by Mr Kiely in July that "no public money went into setting up the Music Factory" was also contradicted in the papers, with several references to spending on the 1980s-style nightclub.

Mr Kiely said he would have to see references such as "$29,250 expense for starting up the Music Factory ... " before commenting.

Last week, ACVL issued a "final wash-up" of finances.

This described the event as providing a "net regional investment of $23.5 million." It said "running the event and public participation"cost $9.5 million. There was some acknowledgement that more than $6 million was lost on several commercial blunders.

But the previously secret documents, between ACVL and Infrastructure Auckland, use a very different terminology, such as "deficit," "loss" and "worst case scenario," to describe the precarious financial position of the public company.

Most financial references to the disastrous American Express Yacht Club and the sponsorship deal with American Express, which led to a huge ruckus inside the organisation and the departure of Mr Sutherland, are blacked out.

One area of difference between Infrastructure Auckland and ACVL which affects the bottomline loss is over the value of the seven syndicate bases and marinas at the end of June.

ACVL provided a $40 million valuation on these assets, based on their value at the end of the next America's Cup in 2003.

But in a letter to Mr Kiely on June 22 by Infrastructure Auckland investment manager, Peter Casey, Mr Casey said the $40 million valuation was at "material variance to the existing value of the marina and syndicate property of $29 million."

Audit New Zealand has also expressed a "fundamental uncertainty" about the ACVL valuation .

A $29 million valuation would add $11 million to the ACVL loss.